Monthly Archives: October 2015

October 8, 2015 · 9:31 am

Beyond The Data

If you’ve been reading along this week, it must seem as if I’m obsessing with data. While my inner nerd is peeking through a bit, that’s not my real obsession. The data I’ve been writing about is only one aspect of what is a primary business obsession of mine: customer retention. It ought to be one of yours too.

Simply put, the only two things that should be a primary focus of your business thinking are making great products (or services) and providing great service to customers. Why? Because those are the two keys to customer retention and customer retention is the key to a successful business.

There is lots of research on the value of keeping a customer versus acquiring a new one. According to research by Market Metrics, your success rate selling something to an existing customer is around 65 percent. The probability of converting a new prospect, on the other hand, is only 5 percent to 20 percent. If you’ve been servicing those customers well and providing great products, that’s a very believable finding since the folks that know you, love you. They spend more too: research says about a third more.

So why aren’t you spending more time thinking about customer retention and about how to cut down the churn rate? Probably because the data points you’re reporting as KPI’s are emphasizing customer base growth. There is a place in the dataset for acquisition information and an important one at that. But, for example. when Google reports that 25% of new app users leave after the first day they install an app, obviously new users can only take you so far. Are you looking at retention rates by acquisition channel? Didn’t think so.

Data is a tool, not a crutch.  The business is about growing and retaining customers.  There are lots of ways to do that but at the core of every one of them are a great product and even better service.  Is that what you can honestly say you have?

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October 7, 2015 · 9:09 am

Blinded By The Light

Yesterday I wrote about using data as a flashlight. There is, of course, a problem inherent in flashlights that is also true about data. If you look at a flashlight the wrong way, you become temporarily blinded. Let someone shine one into your eyes in a dark room and you’ll understand. Data can be blinding too.  

For example, it’s great to have big ears and to listen carefully to what is transpiring with respect to your company or brand in the social sphere. The problem is that we all know those with the loudest mouths tend to be the least satisfied. Some are just chronic complainers; others are trying to get something for nothing. Taking their buzz as gospel can drive you insane as well as point you in the wrong direction. Obviously they can’t be ignored, but that’s a beam of light we need to be sure is aiming in the right direction.

Ratings and reviews are other sources of excellent information, but be sure that as you’re researching (both those of your own brand and those of your competitors) that you’re not falling prey to fake information. There are companies that hire scammers to write them, as this piece explains in detail.  Place what’s out there publicly in the context of your own customer service data and support emails.  Are there large differences?  Complaints that are never made privately but seem to be a steady drumbeat publicly?

I like this quote:

The paradigm has historically been to do some qualitative studies to develop hypotheses for testing, then validate and measure through quantitative studies. The only difference now is that, in addition to intimate panel-based research, we also have the ability to get much more input from a panel of millions.

So as you’re using those million beams of light, don’t forget context and source.  Make your data set as comprehensive as possible before drawing conclusions.  Failing to do so means blindness rather than illumination.

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October 6, 2015 · 12:13 pm

The Flashlight You Need

No one likes to wander around in the dark, tripping over furniture and the odd, misplaced shoe.  It’s why every phone comes with a flashlight app, right? On that note, I’ve ranted a number of times in this space about the need for every business to use a flashlight – the need to measure. “Measure what?” you ask? Like any good consultant, I’ll tell you that there is no one right answer to that. I can, however, tell you how to go about figuring it out.  

It’s more than answering “what’s important.” Obviously, growing revenue and profit is the standard answer. It’s the next layer – what makes those things happen – where we begin to figure out our Key Performance Indicators (KPI’s). I like to start with current customers. How many of them are we retaining? What’s our churn rate? How do you reduce the attrition rate, and what percentage of the customers that have left have we contacted? What are their reasons for leaving? Among the people who stay, what’s their purchase frequency and average order value? Are those numbers growing?

Then maybe we need to fill up the bucket some more. How do we attract new customers? What are our conversion rates on whatever marketing we’re doing? What channels are performing, and which are performing better than others? What’s our ROI on marketing spend? How many prospects are we turning into leads? How many of those are we converting?

Finally, there are some KPI’s that are like chicken soup: they might not help, but they can’t hurt. What is our level of social engagement? Is our brand and/or content being shared? What are our general awareness levels? What is our brand image vs. those of our competitors?

You probably have every one of the pieces of data I mentioned above.  You have a lot more too, although it’s imperative to remember that if it’s not actionable it’s probably not worth bothering about.  Good questions and the data that answer them are the flashlights that help your business find its way in the dark.  Without them, it’s way too easy to get lost.

Is that helpful?

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